STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor MANAGEMENT REPORT GEORGIA BUREAU OF INVESTIGATION AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2004 GEORGIA BUREAU OF INVESTIGATION MANAGEMENT REPORT -TABLE OF CONTENTS- LETTER OF TRANSMITTAL SECTION I SELECTED FINANCIAL INFORMATION EXHIBITS A ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND 1 B SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND 2 SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 w. RUSSELL HINTON STATE AUDITOR (404) 656-2174 Atlanta, Georgia 30334-8400 December 6, 2004 Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Public Safety and Honorable Vernon M. Keenan, Director Georgia Bureau of Investigation Ladies and Gentlemen: As part of our audit of the statutory basis financial statements of the State of Georgia presented in the State of Georgia Report of the State Auditor, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2004, we have performed certain audit procedures at the Georgia Bureau of Investigation. Accordingly, the financial statements and compliance activities of the Georgia Bureau of Investigation were examined to the extent necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal controls as required by the Single Aud it Act Amendments of 1996. This Management Report contains information pertinent to the financial and compliance activities of the Georgia Bureau of Investigation as of and for the year ended June 30, 2004. The particular information provided is enumerated in the Table of Contents. This report is intended solely for the information and use of management of the State of Georgia and members of the Board and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:rwr SECTION I SELECTED FINANCIAL INFORMATION GEORGIA BUREAU OF INVESTIGATION ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30, 2004 EXHIBIT"A" FUND BALANCE - JULY 1, 2003 Reserved Surplus ADDITIONS Adjustments to Prior Year's Contracts and Accounts Payable Excess of Funds Available over Expenditures Exhibit"B" Increase in Reserve for Inventories DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 2003 Reserved Fund Balance Carried Over from Prior Year as Funds Available FUND BALANCE - JUNE 30, 2004 SUMMARY OF FUND BALANCE Reserved Drug Asset Sharing Program Evidence-Georgia Technology Authority Federal Financial Assistance Georgia Crime Victims Emergency Fund Inventories Surplus $ 13,076,416.51 521,698.93 $ 13,598,115.44 $ 172,007.55 13,217,420.07 196,125.94 $ 13,585,553.56 $ 521,698.93 12,381,624.64 $ 12,903,323.57 $==1=4_;;;,2;;;.80;;,;,,3=4=5.=43= $ 1,836,947.33 72,033.02 479,662.02 10,852,226.75 890,917.81 $ 14,131,786.93 148,558.50 $ ===14:l:,2=8,.,,.0,.3.4.=5=.4=3 - 1- GEORGIA BUREAU OF INVESTIGATION SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND YEAR ENDED JUNE 30, 2004 EXHIBIT"B" FUNDS AVAILABLE REVENUES State Appropriation Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance EXPENDmJRES Personal Services Regular Operating Expenses Trawl Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem and Fees Contracts Evidence Purchased Georgia Crime Victims Assistance Program Criminal Justice Grants Excess ofFunds Available over Expenditures BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE} $ 59,854,420.00 $ 59,854,420.00 $ 76,251,630.00 53,929,754.60 11,729,509.00 12,825,642.61 $ 147,835,559.00 $ 126,609,817.21 $ 0.00 -22,321,875.40 1,096,133.61 -21,225,741.79 0.00 12,381,624.64 12,381,624.64 $ 147,835,559.00 $ 138,991,441.85 $ -8,844,117.15 $ 54,464,952.00 $ 52,662,912.69 $ 10,270,075.00 9,760,600.14 952,517.00 643,420.59 1,121,371.00 803,034.39 3,195,662.00 2,024,305.58 1,593,502.00 1,255,405.35 1,701,158.00 1,601,897.35 1,549,439.00 1,440,303.66 4,481,261.00 3,989,796.33 2,936,315.00 2,538,415.24 933,255.00 887,983.44 12,557,400.00 11,829,012.05 52,078,652.00 36,336,934.97 1,802,039.31 509,474.86 309,096.41 318,336.61 1,171,356.42 338,096.65 99,260.65 109,135.34 491,464.67 397,899.76 45,271.56 728,387.95 15,741,717.03 $ 147,835,559.00 $ 125,774,021.78 $ . 22,061,537.22 $ 13,217,420.07 $ 13,217,420.07 -2- SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS GEORGIA BUREAU OF INVESTIGATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Inadequate Capital Asset Records Finding Control Number: FS-471-04-01 Condition: Our examination of the Georgia Bureau of Investigation's accounting records noted that: 1) The Bureau failed to maintain records necessary to report Land and Buildings owned by the Bureau in accordance with the Accounting Procedures Manual for the State of Georgia. 2) The Georgia Bureau of Investigation could not provide a reconciliation of equipment additions to general ledger expenditure accounts. Criteria: The State of Georgia Capital Asset Guide requires that capital assets be reported by category at historical cost or estimated historical cost when actual records are not available. Donated assets should be reported at fair value at the time of donation. Capital assets, except for land and other inexhaustible assets, should be depreciated over their estimated useful life. In addition, accurate subsidiary capital asset inventory records must be maintained. Balances and additions to the inventory records should be reconciled periodically to the general ledger. Cause: These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the Bureau's capital asset records are properly maintained and additions are reconciled periodically to general ledger expenditure accounts. Effect: Capital asset balances may be misstated. The amount of the possible misstatement cannot be determined. Recommendation: Management should develop appropriate policies and procedures to ensure that the Bureau's capital assets are properly accounted for and reported in accordance with the State of Georgia Capital Asset Guide. - 1-